Promoting green banking

Globally climate change is a crucial issue of the time. The change has already affected environment. The earlier predictions of scientists regarding the effects of global climate change are now coming true: melting of sea ice, accelerated sea level rise and intense heat waves. Scientists also have predicted that global temperatures will continue to rise for decades to come, largely due to greenhouse gasses produced and released by human beings.
The impacts of climate change are being increasingly felt in Bangladesh as well. Bangladesh is one of the largest deltas in the world which is highly vulnerable to climate change because of its geographical location, flat and low-lying landscape, population density, poverty, illiteracy, lack of institutional setup etc. Already the country experiences different types of natural disasters almost every year because of global warming as well as climate change impacts like flood, cyclone, salinity intrusion, extreme temperature and drought etc. It is projected that if sea level rises by one metre, 17 per cent low-lying lands of southern region of the country will be submerged and one-fifth of the population will be displaced. So, it is needless to say that Bangladesh is the worst sufferer of the impact of climate change resulting from industrialisation and fallout of greenhouses gases being released by the developed countries.
To lessen the alarming impact of climate change and global warming, the concept of Green Banking and Green Economy has emerged in all topics. Basically, Green Banking is an innovative approach that emphasises on an eco-friendly movement to prevent environmental degradation in order to ensure sustainable development. It also considers all the social and environmental/ecological factors with an aim to protect the environment and conserve natural resources.
Considering the extreme impacts of climate change, the Bangladesh Bank introduced Policy Guidelines for Green Banking in August, 2013. According to this policy, financial institutions need to adopt a comprehensive green banking policy in a formal and structured manner in line with global norms so as to prevent environmental degradation and ensure sustainable banking practices. With a view to developing green banking practices in the country, an indicative Green Banking Policy and Strategy framework has been developed for the financial institutions in the following manner:
The Green Banking Policy needs to be covered through time framework which will be segregated into 3 phases.
FIRST PHASE: During the first phase, financial Institutions are to develop green banking policies and show general commitment to environment through in-house performance. The deadline for actions to be taken under phase-I should not exceed June 30, 2014. Under this phase, banks are to develop the following---
1.    Policy formulation and governance,
2.    Incorporation of environmental risk in Core Risk Management (CRM)
3.    Initiating in-house environment management,
4.    Introducing green finance,
5.    Creation of Climate Risk Fund,
6.    Introducing green marketing, Supporting employee training, consumer awareness and green event, and
7.    Disclosure and reporting of green banking activities.
SECOND PHASE: The timeline for actions to be taken under Phase-II should not exceed December 31, 2014. Under this phase, financial institutions are to develop the following----
1.    Sector specific environmental policies,
2.    Green strategic planning,
3.    Setting up green branches,
4.    Improved in-house environment management,
5.    Formulation of financial institution specific environmental risk management plan and guidelines,
6.    Rigorous programmes to educate clients and
7.    Disclosure and reporting of green banking activities.
THIRD PHASE: The deadline for actions to be taken under Phase-III should not exceed June 30, 2015. Under this phase, financial institutions have to develop the following----
1.    Designing and introducing innovative products, and
2.    Reporting in standard format with external verification.
Bangladesh has achieved a remarkable progress in green banking. Some achievements are mentioned as below-------
*    The Bangladesh Bank has already started implementation of National Payment Switch Bangladesh (NPSB) in order to create a common platform for cards (Debit/Credit/Prepaid), internet and mobile based payments in the country,
*   Implementation of Bangladesh Electronic Fund Transfer Network (BEFTN) system,
*    Implementation of Bangladesh Automated Cheque Processing System,
*    The use of Alternate Delivery Channel (ADC) products like i-banking, SMS banking, phone banking, on-line banking, ATM booths, kiosks, mobile banking, POS terminals etc are increasing exponentially,
*    E-recruitment system,
*   Online facilities of credit information bureau,
*    Policy formulation and implementation,
*    Budget allocation and utilisation,
*    Green banking unit formation,
*    Environmental risk rating,
*    Green financing,
*    Climate risk fund utilization,
*    Green marketing and capacity building,
*    In-house environment management,
*    Sector specific environmental policy,
*    Green strategic planning,
*    Environmental risk management plan and
*    Disclosure and reporting.
The financial sector of Bangladesh is playing a key role as one of the important stake-holders of the economy to design various strategy/action plans keeping in mind the crucial environmental issues. As a responsible business entity, commercial banks should be concerned about its proficiency and research to support environmentally sustainable growth.

---The writer is a Probationary Officer of Islami Bank Bangladesh Limited.
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